January 2024

We have been enjoying a high lifetime transfer tax exemption since 2017 thanks to the Tax Cuts and Jobs Act. In 2024, the estate and gift tax exemption amount is $13.61 million per individual (or $27.22 million per married couple). Nonetheless, the exemption amount may decrease to about $6 million per individual or $12 million per married couple as the Act is set to expire at the end of 2025. It would be wise to start planning now if changes are going to happen.

With well crafted estate planning strategies, we are not only able to save taxes but most importantly we distribute our assets according to our wishes. While some couples want to leave a legacy behind, some may want to start gifting to their children or grandchildren now instead of leaving them bequests after their passing so that their loved ones can enjoy their gifts now. Or you can strategize to gift a portion now and a portion at a later time. If your beneficiaries are minors, consider setting up some provisions, such as spendthrift provisions, so that they can enjoy the gifts responsibly. Consult your estate planning attorneys to draft a plan to fit your goals and wishes.

Full story: Kiplinger

It is quite true that market and economic predictions of most analysts and economists are not usually correct. Even though some can predict correctly before, they are not able to consistently make accurate predictions. Sometimes, analysts from prominent investment firms on Wall Street may say one thing and do the other in order to profit from the market. Therefore, prudent investors may want to count on unbiased research and take different perspectives to make our own educated guesses. 2024 is a year full of uncertainties like any other year. While we cannot be certain about and control what will happen, we can definitely define our goals, assess our risk tolerance, perform due diligence, rebalance portfolios and be nimble in reacting to unexpected events.

Full story: The New York Times

Some Californians have permanently moved away because of high income taxes and living expenses. Some still prefer to stay and look for creative ways to save taxes, such as being seasonal visitors. Those visitors are staying less than six months in California and then stay in other states or outside the US. If you are enjoying both places, that is a perfect way to save taxes. However, if you stay where you may not enjoy just for saving taxes, that may not be a sustainable solution when you miss friends and family in California. Some end up leaving their assets vacant. Worst, they are forced to sell their assets at a loss to come back to California. At Vibrance Wealth Management, we always remind our clients of their goals and the purpose of their wealth while enjoying life. Saving taxes is important, but nothing compared to staying where you feel joy and love.

Being seasonal visitors is prone to be subject to IRS audits. It is important to discuss with your tax advisors before making any moves.

Full story: Forbes

While many set resolutions for the new year, the beginning of the year is also a divorce season because people often put off divorcing until after the holidays. Recent studies show that those who are born between 1946 and 1964 are divorcing more than any other age group. This phenomenon is called gray divorce.

Navigating a divorce is not only emotionally stressful but financially challenging. Many experience their peak earning seasons and accumulate most of their assets in their 50’s and 60’s. Splitting assets both retirement and non-retirement assets and sharing child custody are more complicated.

One of main reasons for divorce is disagreement over money, such as one spouse is a saver while the other is a spender. There may be ways to avoid this happening early on in a relationship or marriage. Feeling safe to discuss money issues and set up a prenuptial agreement could be helpful to avoid divorce down the road. If couples cannot handle the financial topics at the beginning of their relationship, they may not be mature enough to handle other important topics in their marriage anyway. Many do not want to discuss finances before wedding because it does not sound romantic which ends up building disagreements and resentments. Marriage is a legal and financial partnership. Having a prenuptial agreement is similar to a buy-sell agreement when you both exit the business partnership. It is highly recommended that pre-married couples consult with their own separate family attorneys to set up and review the prenuptial agreement before tying the knot. The agreement helps to fight fair and prevents a huge lawyer fee bill in the future.

Full story: AARP